Download - Crowdfunding Options for Entrepreneurs
>$50,000
<$50,000
REWARDS OR DEBT (P2P, P2B)
EQUITY
DEBT (P2B) or
EQUITY
$50,000-$500,000
You can raise significantly more funds
You will not have monthly cash outflow (as in debt
model)
You will give up a small % of shares, so will keep the control over the company’s
operations and planning
The most time consuming out of
three types of crowdfunding
Significant upfront costs and
– annual SEC filing expenses EQUITY
Pros & Cons:Lending:
REWARDS
Costs – depend on the amount to be raised.
Portal fees – 7.5%– 10% plus legal and accounting expenses, annual filing costs.
Very time consuming and it takes months to
get the funds
In the case of fixed funding there is a possibility that you
will not get any money
Huge competition for backers’ attention on
popular crowdfunding
portals
Not all types of businesses/products are a good match for
the rewards type
You keep your company’s ownership
You can raise significantly
more than your initial goal
You can use the campaign for customer engagement, marketing
and PR, pre-sales, beta-testing,
crowdsourcing, finding potential partners, distributors and
investorsYou don’t need to file
extensive documentation (as in equity crowdfunding) or to have high credit score
(as in P2P lending) or a profitable business (as in
P2B lending)
Costs – 7%-14% plus perk fulfillment and marketing expenses
YOUR BEST OPTION
Quick access to
cashYou keep your
company’s ownership
Costs:
0 (Kiva Zip) up to 15% for P2B and 7% to 35% for P2P
Must have a good credit score (P2P) or positive cash
flow (P2B)
Monthly cash outflow
AMOUNT
debt (P2B) or equity
Yes
debt (P2P) or rewards or equity
No
<1 month
equityrewards
debt
3-5 months 5-10 months
Month: 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
TIME
STAGErewards
rewards
debt(P2P)
debt(P2B)
equity(?)
equity
Startup Growth
P2P Lending – for startups in need for immediate cash and means to meet payment obligations
P2B Lending – for established businesses with positive cash flow to finance their expansion
REWARDS – for businesses operating in B2C market with reasonably inexpensive and innovative but not too complicated products. Must have social appeal; be able to produce the product within several months after the end of a campaign
EQUITY – for businesses that can’t (don’t want to) borrow money through P2B marketplace, companies in need to raise higher amounts of money. Must have cash upfront to fund the legal and accounting expenses and can wait for 5 to 10 month to receive the funds.
CrowdfundingFund Your Business
What Type of
Crowdfunding to Use to
Fund Your Business
www.CrowdfundProductions.com